Young entrepreneurs to get micro loans from 'Hardcore Pawn' stars

From left, Vice President of American Jewelry and Loan, Seth Gold, poses with his father and President of American Jewelry and Loan, Les Gold. Gold and his father, are partnering with Junior Achievement of Southeastern Michigan to encourage high school students who dream of running their own business. The so-called "Gold Bank" has contributed $10,000 to fund short-term microloans as part of the JA program.(Photo: Rachel Woolf, Special to the Free Press)

Seth Gold, who gained celebrity status via his role on truTV's "Hardcore Pawn," tells a story that should trigger an aha moment for any budding entrepreneur.

Gold, vice president of American Jewelry and Loan in Detroit, remembers a seminar at a local college where he met a woman who was trying to get a specialty popcorn business off the ground. She took a Baskin-Robbins kind of approach. Think bubble-gum flavored popcorn, cookies-and-cream popcorn, you name it.

"She brought in bags and bags of popcorn. She had 30 flavors you could choose from," Gold said.

Gold, 36, had one question: What flavors are people actually buying?

While options are good, consumers can get so overwhelmed that they don't know what to choose.

And truthfully, creating too many options only forced the woman — who still had to pay bills by working a day job — to toil away on the popcorn business until 4 in the morning. All those flavors created extra costs and cut into any profits, too.

"Let's focus on what you can actually sell," Gold said.

For many, focusing on keeping it simple can be a huge step toward financial independence. What can you sell? What can you do to keep a job, build a career, make money?

Gold and his father, Les Gold, 67, are partnering with Junior Achievement of Southeastern Michigan to encourage high school students who dream of running their own business. The so-called "Gold Bank" has contributed $10,000 to fund short-term microloans as part of the JA program.

The "Gold Bank" money is controlled and administered by Junior Achievement.

High school students involved in the JA Company program throughout Southeastern Michigan will be eligible for a loan, maybe $200 or $1,000. But before qualifying for any money, they're required to do a "Shark Tank" style presentation to a panel of business leaders, including the Golds.

Margaret Trimer-Hartley, president and CEO of Junior Achievement of Southeastern Michigan, said the size of the loan will vary, depending on the product and what's needed to launch the business.

"This is a brand new concept," Trimer-Hartley said.

Two student groups from Southfield High School for the Arts & Technology are expected to make pitches in late February. Other groups may be ready to make pitches for loans in early April, she said.

Some ideas include personalized iPhone cases and personalized footwear.

To qualify, the student companies must receive approval for their products from Junior Achievement USA and be able to successfully pitch their concept to the loan committee, she said.

(Trimer-Hartley last week announced her resignation from Junior Achievement, effective March 9. She will direct corporate communications and corporate citizenship for Delta Dental of Michigan, Ohio and Indiana.)

Les Gold, the patriarch pawnbroker who wrote a book called "For What It's Worth: Business Wisdom from a Pawnbroker," said he'd like to see more young people develop a strong work ethic and take on the challenge of running a business.

The students will be responsible for paying back the loans, as well as paying interest at a low rate, in the same semester in which they borrow the money. The idea is to ensure that the program will fund more young entrepreneurs in the future.

"Young high school kids are going to come up with a business plan and present it to us," Seth Gold said. "None of that money comes back to us, obviously."

Les Gold, who is president and owner, said one of the challenges the business faces is finding dependable employees — including people who will show up as scheduled and stick with the job.

"Even as a kid, it was important to me to go out and work and make money," the elder Gold said.

As a child, he started learning about the pawnshop business from his grandfather Popsie.

As a teen, Gold — who is often photographed now wearing eye-catching men's jewelry — started designing and selling his own chain-style necklaces and bracelets to area stores.

Running three pawnshops — one in Hazel Park, one in Pontiac and the landmark one in Detroit at the corner of Greenfield and 8 Mile Road — remains the focus. But the Golds, who are celebrating the 40th anniversary for American Jewelry and Loan, are taking part in several financial literacy efforts — including holding some seminars in their pawnshops.

A year ago, for example, the pawnshop owners teamed up with the Pontiac Regional Chamber and other local business owners to hold a three-week course on entrepreneurship.

Cash-strapped consumers often turn to alternative lending, such as pawn shops, which can dig a deeper hole. Knowing how to use alternative lending — and where to turn for other low-cost options — can help people better manage their money and make ends meet.

A pawn shop offers loans that you secure with something of value, such as jewelry, electronics or even designer handbags. The pawnbroker keeps your item until you pay off the loan. If you don't pay, you lose the item. If you don't pay and lose the item, your account isn't turned over to a collection agency and there's no impact to your credit report. About 80% or more of customers reclaim their items.

In Michigan, pawn loans are 90 days, and the interest is 3% per month plus a $1 per month storage fee. So for a $100 loan, the borrower would owe $112 at the end of the 90-day term.

Seth Gold said the pawn business can be a barometer of economic conditions — and based on business, he'd say the economy is on a better footing than last year. In general, he said, people aren't taking out as many loans as last year.

Another sign: The line to redeem or pick up the items that were pawned to get loans can be longer some days than the line to take out another loan, he said.

From left, President of American Jewelry and Loan, Les Gold, poses with his son and Vice President of American Jewelry and Loan, Seth Gold, on Thursday, Feb. 1, 2018 at American Jewelry and Loan in Detroit.(Photo: Rachel Woolf, Special to the Free Press)

When economic times are worse, more people are likely to be unable to pay back their loans and get back their TVs or other items that were pawned.

The younger Gold said the business still does well because a significant amount of the population relies on cash and doesn't have a relationship with credit card issuers or traditional banks. Many may pawn electronics, including TVs, to raise short-term loans of $100 or less.

"Business has been steady. People know we're a viable option to make ends meet," Seth Gold said.